Portland administrator details $106 million in unbudgeted housing balances, outlines restrictions and next steps
A revised accounting elevates the total from earlier disclosures
Portland’s city administration has identified about $106 million in housing-related balances that had not been reflected in the City’s budget documents and annual appropriations. City Administrator Raymond C. Lee III summarized the findings in a February 6, 2026 memo to City Council, framing the updated accounting as part of a broader shift toward centralized financial management under Portland’s new form of government.
The $106 million figure consolidates multiple discoveries made over several months. It includes $20.7 million tied to the city’s Rental Services Office program that finance and housing staff identified and confirmed in fall 2025, as well as an additional $24.9 million in other sub-funds within the Housing Investment Fund. The memo also identifies $62.1 million in unbudgeted balances across four other housing-related funds that carry tighter legal restrictions on how they can be spent.
Where the money sits—and why it cannot be treated as general revenue
Lee’s memo emphasizes that these balances are not interchangeable with the City’s general operating dollars. Each fund and sub-fund has defined revenue sources and allowable uses, limiting how quickly and for what purposes Council can redeploy the money.
Based on the memo’s FY 2026–27 expected budgeted balances, the largest categories include:
Tax Increment Fund (Fund 221): $30.57 million, restricted by geography and by urban renewal action plans.
Inclusionary Housing Fund (Fund 225): $26.36 million, tied to Construction Excise Tax revenues and limited by state law and City Code to specific affordable housing purposes.
Housing Investment Fund (Fund 213) sub-funds: including Short-Term Rental (0–60 Nights) at $11.11 million and Short-Term Rental (2%) at $8.60 million, both limited to affordable housing and homelessness-related uses and subject to legal considerations tied to how the revenues are structured.
Affordable Housing Development Fund (Fund 230): $6.52 million, restricted to projects consistent with Portland Housing Bond requirements.
Housing Property Fund (Fund 226): $4.88 million, reserved for operation and maintenance of specified city-owned residential properties.
Timeline and internal controls highlighted in the memo
The memo outlines a timeline beginning in September 2025, when approximately $12 million was first identified as not properly budgeted within the Rental Services Office sub-fund. By November 17, 2025, leadership was informed of an additional $9 million, bringing that sub-fund’s unbudgeted total to $20.7 million. The memo states that on December 1, 2025, the Budget Office directed the Housing Bureau to identify and include all fund balances to ensure none remained unbudgeted, and that a broader review later identified additional unbudgeted balances within the Housing Investment Fund and other housing-related funds.
Independent review and upcoming budget decisions
Lee’s memo states that the City is selecting outside counsel to conduct an independent investigation of the City’s housing funds. It also commits to reflecting these contingency and reserve balances during the annual budget process going forward, a change intended to provide Council with a fuller picture of available resources and constraints before policy decisions are made.
The memo describes the revised accounting as part of a move away from bureau-by-bureau budgeting toward a consolidated, citywide approach, with Council expected to weigh future uses within the legal boundaries of each funding source.
How, and how quickly, any portion of the $106 million can be put to work will depend on Council appropriations, fund-specific restrictions, and the outcome of the planned independent review.